What legal documents do I need to review before purchasing a commercial property?

Legal Documents to Review Before Buying a Commercial Property

As a lawyer, I would advise anyone who is considering buying a commercial property to review a set of legal documents that are relevant to such transactions. These documents may include the following:

1. Title Documents: Title documents will reveal whether the seller has full ownership of the property, free of liens or claims. These documents include the property deed, prior deeds or conveyances, and other relevant documents, such as easements or rights of way.
2. Zoning Documents: Zoning laws will determine what kinds of activities are permitted on the property. The buyer must confirm that the property is appropriately zoned for the intended use. The buyer must get a copy of the zoning map and the zoning ordinance to confirm the property's zoning.
3. Property Condition Reports: The buyer should investigate the current condition of the property for any physical or environmental concerns, such as hazardous waste, structural issues or water damage. The associations should provide a report that identifies any issues with the building, property, or equipment, in detail. The buyer should also carry out a visual inspection of the property to confirm the authenticity of the report.
4. Lease Agreements: If the property has tenants, the buyer needs to know the lease agreements tenants have signed. The buyer is also entitled to know whether past tenants have threatened legal action against the company in the past. If there are existing agreements, buyers should study the type of lease (net or gross lease, single or multi-tenant, etc.), length of tenancy, rent amount, and any disputes between the parties.
5. Financial Documents: Property owners are required to provide their economic evaluation for the property. This includes an income statement on rent and expenses, marketing efforts, and planning for future business ventures. Buyers should request financial records, such as tax returns, financial balance sheets, property operating expenses, and audit reports.
6. Environmental Reports: Due to changes in environmental regulations, commercial land is potentially more vulnerable to environmental problems. Buyers should seek an environmental report to avoid a liability problem. They may also investigate the type of chemicals stored or used on the property in the past.
7. Insurance Documents: Insurance is critical when owning a business property, preventing you from financial losses caused by lawsuits or disasters, and buyers should consider adding their property insurance plan. It would help to have records of which insurance lines exist and the extent of the protection.

In summary, before buying a commercial property, buyers should review several legal documents related to the title, zoning, property condition, leases, financial, environmental, and insurance issues. It is essential to seek legal and professional advice from experts in the relevant jurisdiction since legal requirements and procedures differ by location.